Portugal Colonial - Oil prices slip, stocks rally on Mideast peace hopes

After nearly four weeks of conflict, investors jumped on signs that hostilities could be winding down, with the safe-haven dollar losing support.

However, analysts pointed out that the arrival of more US troops in the Middle East and fresh missile strikes between Iran and Israel suggested chances of escalation remained.

While shares rose modestly, oil prices dipped back as the Brent crude benchmark was down 3 percent at $101.44 a barrel, while West Texas Intermediate was off 2.6 percent at $90.22 a barrel.

- Crisis warning -

As World Trade Organization ministers prepared to meet in Yaounde, the head of the International Chamber of Commerce bluntly warned that the conflict could cause the "worst industrial crisis" in decades.

"The head of the International Energy Agency has warned that the world is facing an energy crisis more severe than the oil shocks of the 1970s," said John Denton. "From a business perspective, we believe this could yet become the worst industrial crisis in living memory."

Offering respite to some countries, Tehran announced it would let oil vessels from "non-hostile" nations pass through the crucial Strait of Hormuz.

Crude futures earlier plunged more than six percent before moving back up after US President Donald Trump voiced optimism at ending the war and said officials were "in negotiations right now".

The head of the International Energy Agency, Fatih Birol, said he was "ready to move forward" with an additional release of oil reserves "if and when necessary".

Wall Street was in the green two hours into the session, with the Dow and the broader-based S&P 500 rising 0.8 percent while the tech-heavy Nasdaq added one percent.

In Europe, London, Frankfurt and Paris closed up just shy of 1.5 percent ahead.

Asian markets closed with strong gains, led by Tokyo, which won nearly three percent.

European Central Bank chief Christine Lagarde meanwhile said the ECB has several options for dealing with the energy shock, vowing policymakers would not be "paralysed by hesitation".

At its most recent meeting last week, the ECB kept interest rates on hold, while warning of higher inflation and lower growth in the eurozone owing to the war.

However, analysts have raised bets on the central bank hiking borrowing costs as soon as next month to try and keep the lid on an expected surge in consumer prices.

- Key figures at around 1645 GMT -

Brent North Sea Crude: DOWN 3.0 percent at $101.44 a barrel

West Texas Intermediate: DOWN 2.6 percent at $90.22 a barrel

New York - Dow: UP 0.8 percent at 46,487.24 points

New York - S&P 500: UP 0.8 percent at 6,606.02

New York - Nasdaq Composite: UP 1.0 percent at 21,986.86

London - FTSE 100: UP 1.4 percent at 10,106.84 points (close)

Paris - CAC 40: UP 1.3 percent at 7,846.55 (close)

Frankfurt - DAX: UP 1.4 percent at 22,957.087 (close)

Tokyo - Nikkei 225: UP 2.9 percent at 53,749.62 (close)

Hong Kong - Hang Seng Index: UP 1.1 percent at 25,335.95 (close)

Shanghai - Composite: UP 1.3 percent at 3,931.84 (close)

Euro/dollar: DOWN at $1.1570 from $1.1583 on Tuesday

Pound/dollar: DOWN at $1.3379 from $1.3381

Dollar/yen: UP at 159.17 yen from 159.03 yen

Euro/pound: DOWN at 86.48 pence from 86.57 pence

burs-bcp/ajb/cw/sbk

A.Motta--PC